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Israel's attacks are increasing geopolitical risks in the region and putting pressure on the Turkish economy. Rising energy prices are challenging Şimşek's economic programme in terms of both inflation and the current account balance.

New threat to inflation: War | Bombs hit Şimşek's programme
Photo: AA

BirGün / Ankara

The war that began with Israel's attack on Iran on 13 June and Iran's retaliation has now entered its fifth day. As the impact of the conflict on the markets increases, geopolitical tensions are causing oil and gold prices to remain high. Concerns that prolonged conflicts could disrupt oil supplies are increasing price volatility. If the Strait of Hormuz, through which 20% of oil and a significant portion of natural gas pass, were to be closed, Brent crude oil prices could surpass $150 per barrel, setting a new record.

The impact of the war on the country's economy is expected to be reflected in production costs due to the increase in energy prices.

Energy and Natural Resources Minister Alparslan Bayraktar, who stated that Turkey has not purchased any oil from Iran since 2019, answered questions from journalists after the Cabinet Meeting. Bayraktar stated that natural gas is imported from Iran and that natural gas prices may also increase during this process, saying, ‘It may create a negative situation related to global supply. Prices have already started to rise. They are going up a little. Could they go up further? They could. But we do not see a problem on the supply side.’

Bayraktar said, "Turkey has not been importing oil from Iran since 2019. There is a crude oil supply that comes to Turkey via Basra and passes through Hormuz. According to last year's figures, it is around 20 per cent. We need to replace it somehow. The most important impact on us here is the increase in imports in macro terms. Oil prices have risen from $60 to $76. This will have an impact on natural gas. We do not see any problems with natural gas or supply security. We import gas from Iran, not oil," he said. Bayraktar also assessed whether the oil reserves in Gabar could be an alternative during this process, noting that 8% of Turkey's oil needs are met by Gabar.

IMPACT ON INFLATION

Noting that the increase in oil prices could have an upward effect on domestic inflation, Prof. Dr. Mehmet Şişman said, "Israel's attack on Iran will affect Iran-Turkey relations and also shows a new crossroads for the Middle East. Prices are rising, especially energy prices. They have already increased by over 15% in the last month."

Reminding that there was a decline in oil prices as summer approached, Şişman said, "Prices have started to rise again. The oil price has exceeded 70 dollars. This is a dangerous trend; a price above 70 dollars will further increase other prices. The possibility of reaching 80-90 dollars depends on the course of the war. We are facing a development that will affect production costs, especially oil. This means it will also affect inflation in Turkey. Because diesel and petrol are used in the transportation of all goods."

On the other hand, drawing attention to the possibility of a decline in tourism revenues, Şişman said, "In tourism, which is already operating at low capacity, it is possible to say that revenues will not increase in an environment where bombs are exploding in the air. Reservations may be cancelled. This danger means the erosion of the fresh foreign exchange source coming from tourism. This will also reduce the effect of tourism in reducing the current account deficit in the economy. I am not saying that tourism will completely come to an end, but unfortunately, it will be greatly affected this summer. We are in a close geographical location."

Şişman also assessed the possibility of Iranian capital coming to Turkey in the medium term, saying, ‘There may be an increase in net error and omission. This could also create an advantageous position for Turkey. However, we are facing a development that will directly affect production costs, with more disadvantages than advantages.’

Note: This article is translated from the original article titled “Enflasyonda yeni tehlike: Savaş | Bombalar Şimşek programını vurdu” published in BirGün newspaper on June 18, 2025.